Sunday, March 17, 2019
Gaylor v. Mnuchin, No 16-cv-215 (7th Cir. Mar. 15, 2019):
Since the Founders crafted the Religion Clauses of the First Amendment, courts have grappled with the “play in the joints” between them. Walz v. Tax Comm. of City of N.Y., 397 U.S. 664, 669 (1970). This case calls us to do so once more. Freedom From Religion Foundation (“FFRF”) claims that a longstanding tax code exemption for religious housing, 26 U.S.C. § 107(2) of the Internal Revenue Code, violates the Establishment Clause. The district court agreed. The U.S. Treasury Department and several intervening religious organizations ask us to reinstate the exemption, asserting that the survival of many congregations hangs in the balance. We must decide whether excluding housing allowances from ministers’ taxable income is a law “respecting an establishment of religion” in violation of the First Amendment. ...
We conclude § 107(2) has a secular legislative purpose, its principal effect is neither to endorse nor to inhibit religion, and it does not cause excessive government entanglement. Here, “[t]here is no genuine nexus between tax exemption and establishment of religion.” Walz, 397 U.S. at 675. Section 107(2), then, does not violate the Establishment Clause under the Lemon test. ... [W]e conclude § 107(2) does not violate the Establishment Clause under the historical significance test.
FFRF claims § 107(2) renders unto God that which is Caesar’s. But this tax provision falls into the play between the joints of the Free Exercise Clause and the Establishment Clause: neither commanded by the former, nor proscribed by the latter. We conclude § 107(2) is constitutional. The judgment of the district court is REVERSED.
(Hat Tip: Steven Sholk.) Prior TaxProf Blog coverage:
- Richard Reinhold (Chair, Tax Department, Willkie Farr & Gallagher, New York) Presents Does The Section 107 Parsonage Allowance Violate The Establishment Clause? Today At NYU (Mar. 9, 2019)
- 7th Circuit Hears Oral Argument In Appeal Of District Court Ruling That § 107 Housing Allowance For 'Ministers Of The Gospel' Violates The Establishment Clause (Oct. 28, 2018)
- District Court: § 107 Housing Allowance For 'Ministers Of The Gospel' Violates The Establishment Clause (Oct. 8, 2018)
- 22 Tax Profs File Amicus Brief: The Section 107 Housing Allowance For 'Ministers Of The Gospel' Violates The First Amendment's Establishment Clause (July 22, 2018)
- Adam Chodorow (Arizona State), The Parsonage Exemption, 51 UC Davis L. Rev. 849 (2018) (June 27, 2018)
- Edward Zelinsky (Cardozo), The Parsonage Allowance And The Johnson Amendment (Jan. 14, 2018)
- Clergy Ask Court To Reject Atheist Lawsuit Against § 107 Housing Allowances For 'Ministers Of The Gospel' (Dec. 18, 2016)
- Atheists Try Again To Strike § 107 Housing Allowance for 'Ministers of the Gospel' (Apr. 10, 2016)
- 7th Circuit Rejects Constitutional Challenge to § 107 Housing Allowance for 'Ministers of the Gospel' on Standing Grounds (Nov. 13, 2014)
- District Court Dismisses Atheists' Challenge to Tax Benefits for Churches and Clergy (May 22, 2014)
- Edward Zelinsky (Cardozo), The First Amendment and the Parsonage Allowance, 142 Tax Notes 413 (2014) (Jan. 30, 2014)
- DOJ Appeals Invalidation of § 107 Housing Allowance for 'Ministers of the Gospel' (Jan. 26, 2014)
- District Court: § 107 Housing Allowance for 'Ministers of the Gospel' Violates the Establishment Clause (Nov. 24, 2013)
- Edward Zelinsky (Cardozo), The Constitutionality of the § 107 Parsonage Allowance (Mar. 23, 2012)
- District Court Allows 1st Amendment Challenge to § 107 Parsonage Allowance to Proceed to Trial (May 24, 2010)
- John Dorocak (Western State), The Income Tax Exclusion of the Housing Allowance for Ministers of the Gospel Per I.R.C. § 107: First Amendment Establishment of Religion or Free Exercise Thereof -- Where Should the Warren Court Have Gone?, 54 S.D. L. Rev. 233 (2009) (June 20, 2009)